Whose land is it anyway?

23 Aug 10 Whose land is it anyway?

As India struggles to break out of poverty and accelerate growth, it faces numerous challenges. Among these, one of the biggest pain points is the complexity in acquiring land for projects of any kind – be it infrastructure or industry.

Land is a fundamental resource. You can live on it, farm it, mine it, build a factory on it, lay a road on it, build a school on it; almost every economic activity is dependent on the supply of land. But the availability of this valuable resource is stymied by political whim and vested interest. As a result, today almost every large investment is stuck due to problems in land acquisition.

In Aligarh (UP), several farmers died in police firing while agitating against unfair compensation for land acquired for the Yamuna expressway between Delhi and Agra.

In Tiruvannamalai and Kancheepuram districts (TN), farmers allege irregularities in the procurement process by the State Industries Promotion Corp. of Tamil Nadu Ltd (Sipcot).

In Nandigram (West Bengal), more than 4,000 armed policemen attacked those protesting the acquisition of 10,000 acres for a SEZ. At least 14 people died. Many more were injured.

Tata Motors was forced out of Singur, when protests snowballed into a major political controversy, fueled by Ms. Mamata Banerjee.

Reliance Industries’ plan to build India’s largest port at Rewas in Maharashtra is running two years late behind schedule due to delays in land acquisition.

Fifteen years after the proposed highway between Bangalore and Mysore was cleared, it is still mired in land acquisition delays.

According to a report by Infrastructure Development Finance Co. Ltd (IDFC), around 70% of Indian infrastructure projects are delayed by land acquisition problems. These include railway, road, and power projects.

The resentment that has strengthened Maoists in Eastern India has much to do with forced land acquisition for mining, industry and infrastructure. Poor tribals have been cheated, making them sympathetic to the Maoists, who promise to protect their rights.

While there are many explanations for all this chaos, including democracy, unfair compensation, political interference, land grab by industrialists, and so on; the blame lies with outdated and perverse legislation. Believe it or not, we still follow a British-era law, the The Land Acquisition Act, 1894 !! This law enables the government to acquire land for any “public purpose”. Our original constitution protected private property (clause 31), but several amendments initiated by Jawaharlal Nehru and subsequent governments diluted this right. Ostensibly, this was done to facilitate agrarian reforms, but effectively allows the state to acquire any land for any reason, and without just compensation. Ironically, the amendments meant to to give land to the poor, are now being used to grab their land!

And the state’s stranglehold over large land transactions has positioned the government as monopolistic real estate agents with the right to transfer land from one individual to another, at whim. This is nothing less than a Super License Raj – with politicians and bureaucrats having the power to decide whose land to acquire, and who to favour. So we have poor farmers getting unfair compensation, even as businesses pay too much. The difference is pocketed by the “real estate agents”, i.e. those in power. And when any politician is left out of the gravy train, they will do everything to derail the project – just as Mr. Deve Gowda has done with the Bangalore Mysore highway.

The solution is clear, but not simple. First of all, we have to re-instate our rights to private property and get rid of Articles 31A, 31B and 31C, so as to reduce the power of governments to grab land. Accompanying this, reforms in land titling are a must, so each individual’s ownership is recorded. There must be the freedom to sell (or not), without arbitrary government intervention.

Crony capitalists might decry this as likely to worsen the situation. However, while the creation of a free market (underpinned by the fundamental right to private property) may result in higher payments to landowners, total costs will fall – as every project will not consume huge amounts of political, judicial and police attention, not to mention the graft and black money generated at every stage of the process.

Unfortunately, this does not appear likely. The Land Acquisition Bill (2007) is stuck in Parliament (thanks to Mamata Banerjee), but even if it passes, it will not address the core issue of the right to private property. Transparency in land transactions will take away the ability of politicians, their buddies and corrupt government officials to make enormous amounts of money. And if we expect lawmakers to enact laws that reduce their earning capacity, we’re living in a fool’s paradise!

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Arun Jethmalani

Arun is one of the founders of ValueNotes. Apart from trying to build a high-quality research business, he has spent the last 27 years researching, analyzing, and dissecting companies and industries. He has worked with clients of all shapes and sizes, from all parts of the world – in providing them insights that make a difference to their business.
Prior to ValueNotes, he was an equity analyst/advisor, and wrote extensively on investing – including a column titled “Value for Money” which ran for 10 years in the Sunday edition of the Economic Times. To this day, he remains an avid “value” investor.
He has also been published in several other publications, and is a regular speaker at events related to technology, investing, competitive intelligence, business process management, Internet, etc. See: Valuenotes Events
He has been instrumental in developing a community of research and intelligence professionals in India, and is the founder and current chairman of the SCIP (India) Chapter.
Arun holds a B Tech from IIT, Bombay and an MS from Duke University, NC, USA.
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7 Comments

manjunathpvg

The other thing which happens is, at least in Karnataka (i am sure it must be happening elsewhere also), that before govt / departments notify land for acquisition, people in power and know how including big corporates (benami transactions) purchase the land surrounding point of acquisition and make huge money. This purchase most of the time happens with goondagiri. In addition, our greedy middle class investors (forget about HNIs and powerful) flock to buy the same land as investment using the words “doubling of money in six months” to each other. Poor village farmer not knowing english will ultimately as some security guard. This is the reality rest is all corporate / business channel jargon.

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Farmers are being looted by the Dalal (Agent) Govts. Govt. Farmers’ land should be acquired forcefully and farmers should be paid compensation multiplied 20 times of Circle rate of the acquired rate.. Otherwise, New Land Acquisition Laws should come into existence.

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Indian politicians use to speak from the high podiums every inch of occupied Kashmir is ours and no occupation will be tolerated.All are silent now, when in addition to Pakistan an additional arrangement has put Chinese soldiers also in the Azad Kashmir.When voice of such strong and vibrant politicians is stuck up where does the mere 1010 families given notice for acquisition stand.Wake-up save Kashmir we can decide about the e-way later.

Aman
Really appreciate your comments and perspective. I agree that the rights of the farmers (including the right of livelihood) must be protected, and since this is not happening, we face so much protest and violence.

aman karwasra

its true that forthe sake of one you should not stop the progress of thousands…… but it all seems you all the guys here are from city and are not land owners …let me tell you i am a farmer and i’ll tell you the main problem :

: first in india due to land ceiling act one can only have 30 acres of land as agriculture land

: that meanns he only has 15,00,000 as net saving per year (if only he is lucky enough to survive from flood and has SUPER BUMPER crop) other wise 300000 only

: he atleast has a son or a daughter to study and rest all expenses you know

: now if govt desires to acquire land at rates FAR lower than market rates. how do you think he is gonna let that happen (take this example on you if gavt tries to acquire your house and just gives you 1.5 lakh where will go and what will you do )

and then if some how govt takes the land and then makes payment 1/10 in a year how will he feels CHEATED yes……. and he do not has money to fight case even ….

that is why PAY above market rates “cause he is never gonna have this land again” and PAY ON THE SPOT could resolve the matter

Hi Rajiv,
I agree – we cannot let a few people stall development. But isn’t that what is happening today?

If clear-cut rules on “fair” compensation exist and are adhered to, then the problem will be much reduced. It is definitely not an easy issue, but the rules must be fair to the land-owner, and compensation must be paid as promised. With the government handling all this today, we face a lot of avoidable resistance due to their apathy and inefficiency.

Regards
Arun

Rajiv Bishnoi

While the intention of private property is commendable, some provisions must be ensured so that some one ( or a few people) do not abuse the right to stall progress on a massive project. For example, if you remember “Kandu Khera” controversy few years ago, when Haryana agreed to part with Chandigarh for getting parts of hindi speaking punjab (Abohar Fajilka). Kandukhera – one village touching the state boundaries, remained Punjabi speaking and whole process was derailed as no contiguous land mass was possible with an island village of another state.

Similarly, think of a national highway project. 10 farmers may collide and not sell their land at any cost ( or ask for obscene amounts like few independent MLAs/MPs seek for their support during hung parliaments/assemblies)and whole project is stalled.

The issue is not easy as it sounds. As an alternative, we should first see how other countries do it ( e.g. China/ Japan), especially which have large population dependent on farming ( e.g. US example would not be appropriate as only 2-3% people are farmers and they have large land holdings, so one road crossing somewhere in one’s farm is not going to take away all his land).